How to Find Investors for a Real Estate Deal Without Breaking Securities Rules
Troy Buckholdt
Many first-time sponsors find investors in their own network: friends, coworkers, past clients and people who follow their content. How you can reach them depends on your exemption. Under Rule 506(b), you can't advertise, so in practice you offer the deal to people you already have a real relationship with. Under Rule 506(c), you can advertise it publicly, but every investor must be accredited and verified.
Which exemption are you using?
| Topic | Rule 506(b) | Rule 506(c) |
|---|---|---|
| Who you can offer it to | People you have a pre-existing, substantive relationship with | Anyone |
| Public posts, ads, open webinars | Not allowed | Allowed |
| Investors | Accredited, plus up to 35 non-accredited investors in any 90 days who are financially sophisticated, alone or with a purchaser representative | Accredited only |
| Verification | Reasonable belief they qualify | Reasonable steps to verify each investor |
In 2025, issuers filed 30,315 new offerings under 506(b) and 3,989 under 506(c), according to the SEC. Most private raises still happen quietly, through relationships. See 506(b) vs. 506(c) for the full comparison.
Where do real estate sponsors find investors?
- Your existing network. Friends, family, coworkers and business contacts you already know well. This is where many first deals come from, and it works under 506(b) if the relationship is substantive.
- Past co-investors and partners. People who have invested with you or your partners before. The SEC's 2026 staff guidance names existing and prior investors as an example of a substantive relationship.
- Your content. YouTube, a podcast, a newsletter or social posts that teach real estate build trust before you have a deal. Teaching is generally fine under either exemption, as long as it doesn't hype an upcoming deal. Followers don't count as a substantive relationship on their own. Pitching a specific live deal publicly requires 506(c).
- An investor list with a real qualification step. Qualify people before your offering starts, not just before you send them the deal. Learn about their finances and experience, ideally on a call. In a 2015 letter, SEC staff said a process like this can create a substantive relationship.
- Co-sponsors with their own networks. An experienced operator or co-sponsor with real duties can bring investors who know them. See paying sponsors and capital raisers before you structure it.
- Local meetups and conferences. Good for meeting people. But speaking about a live deal at an event open to the public counts as general solicitation, so do that only under 506(c). SEC Rule 148 allows certain "demo day" events hosted by universities, nonprofits, angel groups or accelerators, but they rarely fit real estate deals and limit what you can say.
- Public deal pages and ads under 506(c). Once you're using 506(c), you can share one link for the deal anywhere, as long as every investor is verified before they invest.
How do you build a "pre-existing, substantive relationship"?
The SEC hasn't set a checklist, but its guidance points in one direction: you need to actually know the person's finances and experience before your offering starts.
- Quality over time. SEC staff wrote in 2015 that "the quality of the relationship between an issuer (or its agent) and an investor is the most important factor." There's no specific waiting period.
- A checkbox isn't enough. In a 2020 rulemaking, the SEC said a substantive relationship means the issuer has enough information to evaluate, and does evaluate, the person's finances and sophistication. Self-certification alone, "by checking a box," isn't enough.
- Get the information, then evaluate it. Have a real conversation about their income or net worth, investing experience and goals, and keep notes.
Can you switch from 506(c) to 506(b) later?
Yes, with care. SEC staff guidance from January 2026 says that if you publicly advertised a 506(c) deal, you can include those people in a later 506(b) offering only if you built a substantive relationship with them before the 506(b) offering began. You can't create that relationship just by letting time pass.
What should you avoid when looking for investors?
- Paying finders. Paying someone per investor or per dollar raised can make them an unregistered broker under Section 15(a) of the Exchange Act.
- Public pitches under 506(b). A public post, an open webinar or a newsletter that pitches a live deal is general solicitation, which 506(b) doesn't allow.
- Promising returns. Projections in public posts are risky under any exemption. The SEC's antifraud rules apply to every private placement. See how to raise money on social media legally.
- Skipping verification under 506(c). A checkbox isn't enough. See accredited investor verification.
How DoorRaise helps you raise from your audience
DoorRaise is built for sponsors raising under 506(c). You get one link for your deal that you can share anywhere. Investors verify that they're accredited, sign and fund escrow from that page. Verification is included in our flat $5,000 fee, which the deal pays at closing. Our posting rules spell out what you can and can't say about a live deal.
DoorRaise isn’t open to the public yet.
Built for apartment buildings with 5 or more units: one link for the deal, escrow until closing and a standard fee card.
FAQ
Can I post my apartment deal on Instagram or YouTube?
Among Rule 506 options, only under 506(c), and only if every investor is verified as accredited. Under 506(b), public posts about a live deal aren't allowed. Reg CF and Reg A also allow public offers, with their own limits.
How long do I need to know someone before offering them a 506(b) deal?
There's no set waiting period. What matters is that, before the offering starts, you know enough about their finances and experience to judge whether they're accredited or sophisticated and can understand the risks.
Can I host a webinar about my deal?
An open webinar that anyone can join is general solicitation, so it fits only a 506(c) offering. A private call with people you already have relationships with can work under 506(b).
Do my friends and family have to be accredited?
Under 506(c), yes. Under 506(b), you can include up to 35 non-accredited investors in any 90 days if each is financially sophisticated, but you must give them extra disclosure.
Can I pay someone to introduce investors?
Paying per investor or per dollar raised usually requires broker-dealer registration. Talk to a securities attorney before you agree to any finder arrangement.
Sources
- 17 CFR 230.506 (Rules 506(b) and 506(c))
- 17 CFR 230.502(c) (general solicitation)
- SEC, general solicitation basics
- SEC staff letter, Citizen VC (2015)
- SEC Release 33-10884 (2020)
- SEC, Securities Act Rules interpretations
- SEC, Regulation D offering statistics
- 17 CFR 230.148 (demo days)
- 15 U.S.C. 78o (Section 15(a))
This post is general information, not legal advice. Talk to a securities attorney before you offer a deal to anyone. DoorRaise is not a broker-dealer, investment adviser or funding portal.